Revisiting the Prebisch-Singer hypothesis in the era of globalization
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This study revisits the validity of the Prebisch-Singer hypothesis in the era of globalization using monthly data from 1986M1 to 2019M7. To identify the trend and different stationary processes, we have estimated the linear unit root test of Elliott, Rothenberg, and Stock (1996), the nonlinear unit root test of Kapetanios, Shin and Shell (2003) and, finally, the LM unit root test of Lee and Strazicich (2003) which considers two structural breaks. Out of twenty-four primary commodities, thirteen commodities are trendless while nine of the remaining have a negative trend, and the remaining two have a positive trend. Furthermore, most of the food items follow a trend stationary process implying a temporary effect of shocks. On the other hand, most non-food and metal commodities follow a different stationary process, indicating that shocks’ effect is permanent. Finally, these ambiguous findings hardly support the Prebisch-Singer hypothesis and conclude that this hypothesis could not be a generally accepted phenomenon in the globalized era.
Abstract
This study revisits the validity of the Prebisch-Singer hypothesis in the era of globalization using monthly data from 1986M1 to 2019M7. To identify the trend and different stationary processes, we have estimated the linear unit root test of Elliott, Rothenberg, and Stock (1996), the nonlinear unit root test of Kapetanios, Shin and Shell (2003) and, finally, the LM unit root test of Lee and Strazicich (2003) which considers two structural breaks. Out of twenty-four primary commodities, thirteen commodities are trendless while nine of the remaining have a negative trend, and the remaining two have a positive trend. Furthermore, most of the food items follow a trend stationary process implying a temporary effect of shocks. On the other hand, most non-food and metal commodities follow a different stationary process, indicating that shocks’ effect is permanent. Finally, these ambiguous findings hardly support the Prebisch-Singer hypothesis and conclude that this hypothesis could not be a generally accepted phenomenon in the globalized era.
참고문헌 (37)
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